Air Permit Proposed for Shell Drilling Rig in Arctic’s Beaufort Sea

(Seattle, WA – February 25, 2008) The U.S. Environmental Protection Agency (EPA) has proposed to issue an air quality permit to Shell Offshore, Inc. (Shell), to regulate air emissions from the Kulluk floating drilling rig. Shell is planning to use the Kulluk, and its support vessels, to explore for oil and gas beneath the Outer Continental Shelf (OCS) of the Beaufort Sea, north of Alaska.

According to Rick Albright, Director of EPA’s Air, Waste & Toxics office in Seattle, careful review and analysis has led EPA to determine that air emissions authorized under the proposed permit would have no adverse effect on public health in nearby Arctic communities.

“The local communities have expressed a wide range of important social and public health concerns related to this permit," said EPA’s Albright. "We examined questions related to air quality impacts associated with the exploratory drilling operation. From an air quality standpoint, this proposed permit will meet all health-based ambient air quality standards.”

Shell originally applied for two minor permits, for two drill rigs. Those permits were appealed to EPA’s Environmental Appeals Board (EAB) and remanded back to EPA for further review. The EAB ordered EPA to provide a rational basis for its decision to treat individual drill sites separated by more than 500 meters as separate minor sources, or to modify its source determination. Shell is now requesting a single permit, for only one drill rig.

Based on EPA’s review of both new and existing information related to Shell's proposed drilling operation, the Agency has:

modified its determination as to what constitutes a single stationary source,

revised the ambient air impact analysis, and

added or modified some permit terms and conditions.

This “minor” permit will limit emissions of any single air pollutant to 245 tons per year for activities associated with each drill site. Without this limit, the project could trigger "major” permitting, thereby requiring a more rigorous permitting process and best available control technology review.

The proposed permit and supporting documents are now available for public review and comment through April 1, 2008. If there is sufficient interest, EPA will host public meetings and public hearings on the North Slope in Barrow, Kaktovik, and Nuiqsut, on March 25, 26, and 27, respectively.

According to EPA’s Rick Albright, the public involvement process has been formulated in partnership with the North Slope communities.

“EPA is committed to crafting a meaningful public involvement process that makes sense for these communities,” said Albright. “We’ve been in close contact with them from the beginning and are working hard to avoid interfering with the whaling season. We invite everyone to get involved, attend public meetings and offer comments on the revised portions of the permit. The comments will be carefully considered before we make a final decision.”